Yellen Leaves Unfinished Business

WASHINGTON - Even during her final news conference as chairwoman of the Federal Reserve, Janet L. Yellen last month stuck to the careful approach that helped her guide the central bank through a pivotal period.

Asked if she was disappointed that her historic tenure as the first woman to lead the Fed was ending after just one term, she demurred. She brushed off a query about whether the Republican tax cuts were ill-timed. She wouldn't even bite on a lighthearted question about which black dot was hers on the quarterly chart of Fed policymakers' interest rate forecasts.

"I've never been willing to reveal which dot is mine," she said, smiling, "and I'm not going to change that now."

When Yellen steps down next month, she'll depart with the economy in strong shape and monetary policymakers armed with more options than they've had in years, should it falter.

But the soft-spoken former UC Berkeley economist also leaves some important unfinished business after an unusually short four-year stint as leader of the world's most influential central bank.

While the nation has essentially returned to full employment under her watch, inflation remains stubbornly below the Fed's annual 2 percent target.

That's helped prevent faster wage growth and caused policymakers to fret about the longer-term consequences for the economy.

Also, although Yellen shepherded the effort to begin unwinding the extraordinary and controversial steps the Fed took to fight the financial crisis and Great Recession a decade ago, she won't be around to complete the complicated task.

And she won't be presiding over the institution as it begins weighing potentially far-reaching changes in how it handles monetary policy in an era of slower growth.

Despite widespread praise for her performance, President Trump decided last fall not to renominate Yellen, a Democrat, for a second four-year term as chairwoman. Instead, he chose Fed governor Jerome H. Powell, a Republican who has been a loyal supporter of Yellen's agenda.

The decision broke with the recent precedent of presidents extending the terms of Fed chiefs originally nominated by predecessors from the other political party.

For Yellen, 71, that means she'll have had the shortest tenure for a Fed leader in nearly four decades.

"She wanted to continue," said Princeton economist Alan Blinder, a former Fed vice chairman and good friend of Yellen's. "I think she always knew it was an uphill battle once Donald Trump got elected."

With her term ending Feb. 3 - three days after leading her last monetary policy meeting in which no new action is expected - Yellen won't have the chance to leave the kind of mark left by her recent predecessors.

Paul Volcker is known for taming high inflation in the 1980s. Alan Greenspan oversaw the longest U.S. economic expansion on record while chairman for almost two decades, although the Fed under him also was blamed for the housing bubble that burst into the Great Recession. Ben S. Bernanke engineered the Fed's aggressive response to the financial crisis and is credited with saving the nation from a second Depression.

"On the one hand, she didn't have to deal with anything as difficult as Ben Bernanke did, not even close," Blinder said. "But on the other hand, she handled the situation she got superbly."

Said Donald Kohn, a senior fellow at the Brookings Institution think tank who was Fed vice chairman from 2006 to 2010: "She's been able to lead the committee in a way that's avoided major financial disruption while beginning the rollback of unconventional monetary policy. I think that's quite an accomplishment."